In the few years that have passed since the completion of the Human Genome Project, few technologies have spent more time in the public spotlight than stem cells. Stem cell research offers great hope for a multitude of diseases where traditional therapeutic approaches have failed. But while the concept of using these cells to treat disease is a definite Rule Breaking idea, does that mean that the technology is "investment-ready"?
Many technologies have captured investors' imagination with the hope of new and better therapeutics, only to turn into monumental disappointments. Antisense, cancer vaccines, and gene therapy are technologies that have done nothing to date except destroy investors' capital. Investors interested in stem cells should keep in mind that the road to a commercially viable technology is full of potholes.
What are stem cells?
There are two main types of stem cells: embryonic and adult. The former come from embryos and can turn into any other cell type in the body. Adult stem cells are more limited in that they are specific for the organ in which they are found, and their purpose is to replace cells that have died. For example, liver stem cells can create new cells in the liver but cannot generally become another type of cell.
One of the hopes is that the ability of these cells to become healthy new cells of a specific type can be harnessed to treat diseases where there is serious tissue damage. This includes Parkinson's disease, spinal cord injury, type 1 diabetes, and damage to the heart from heart attacks. If the promise of stem cell research is fulfilled, stem cells could be directed to form new nerve cells in the spinal cord, which could allow patients to regain mobility. Or form new cells in the brain to replace those damaged in Parkinson's patients.
Because of the promise of stem cells to succeed where others have failed, there is a lot of excitement, as evidenced by the presidential campaign and recent media attention. Anyone interested in additional information on stem cells can look at two great sources from the National Institutes of Health and Medline.
Now, if fulfilling this dream were only as easy as getting the issue on the cover of Newsweek. Blazing the trail to scientific breakthroughs is an arduous process full of unexpected problems. Stem cell research is not immune to technical difficulties that must be overcome prior to commercialization of a product. Unfortunately, the list of potential problems is long and loaded with challenges that are not easily surmounted.
Treating a patient with stem cells is not going to be as simple as injecting a patient with the cells and sending them on their way. At least not yet, because there are a few kinks to work out. The stem cells have to survive in the patient after the transplant, which requires keeping the patient's immune system from attacking the transplanted cells as if they were foreign invaders.
Assuming the stem cells survive in the patient, there is then the matter of getting them to do what they are supposed to do. For spinal cord injuries, that would mean the cells are able to effectively reconnect the previously severed connections. Or in Parkinson's disease, the stem cells would need to form connections with other neurons to perform the functions that were lost when the original nerve cells died. Getting the stem cells to properly integrate with the patient's organ system is not going to be an easy problem to solve. Despite a lot of effort, we have to realize that it may never be worked out.
There is also the concern that implanted stem cells could keep growing and form a tumor. Or they could have other negative effects on the patient. Only through carefully conducting clinical trials will those possibilities be resolved.
The number of public biotech companies working on stem cells can be counted on one hand with fingers to spare. The most well-known and the best-funded company is Geron (Nasdaq: GERN ) , which is working with embryonic stem cells to develop therapies for many of the diseases I covered above. Geron is looking to demonstrate proof of concept in humans in a spinal cord injury clinical trial in 2006, a date that is not all that far off in drug development time. Geron has presented some interesting preclinical results in animals and has some evidence it can get around the immune system. That said, there's a big difference between getting something to work in animals and getting the same result in human patients. The transition is not always smooth, though I am sure most everyone will be eagerly awaiting the results of this trial.
Aastrom Biosciences (Nasdaq: ASTM ) is using adult stem cells for the regenerative repair of damaged human tissues. The company has its products, which are based on bone marrow stem cells, in clinical trials for bone regeneration in patients with severe bone fractures. Also, a trial is expected to start next year for regeneration of vascular tissue in patients with diabetes.
StemCells (Nasdaq: STEM ) is in the process of identifying and isolating stem cells from a variety of tissues, including the brain, liver, and pancreas. The company is going to file an Investigational New Drug application in the first quarter of next year for efforts to battle Batten disease, a rare genetic disorder that affects the brain. The company is also conducting preclinical research on liver and pancreatic stem cells.
The Foolish take-home
The title of this article asks whether stem cells are a Rule Breaker. The concept unquestionably has Rule-Breaking qualities, but as a biotech investor, I am very wary of unproven technologies. Stem cell research is in its infancy with numerous problems that need to be overcome through years of basic research. Commercialized products are a long way off, and the reality is they may never come.
For me, this means that stem cells are not a Rule Breaker because they are not an investable idea at this time. Biotech investors take on enough risk in the normal course of drug development that we do not need to worry about whether or not the underlying technology even works. My rule of thumb is that there should at least be some proof of concept data from clinical trials before investors even consider plunking some money down. One day, I hope that stem cell research fits this bill, but right now it does not.
For more about the biotech industry, and for some true Rule Breakers, take a free trial of David Gardner's new Motley Fool Rule Breakers newsletter service today.
Fool contributor Charly Travers does not own shares of any company mentioned in this article.
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